Pier 1 has been offering more smaller decorative items such as side tables, rather than bulky big-ticket goods like couches and wardrobes, in a bid to win more shoppers. "Our spring, outdoor and Easter product assortments are pacing ahead of last year and ... this momentum will carry into the first quarter," Chief Executive Alex Smith said in a statement.

The retailer projected a fourth-quarter profit of 47 to 48 cents a share, excluding a tax benefit, while analysts are expecting earnings of 47 cents a share, according to Thomson Reuters I/B/E/S.

Pier 1, which competes with larger rivals Bed Bath and Beyond (BBBY.O) and Williams Sonoma Inc (WSM.N), said gross margins are expected to grow to about 45.5 percent from 42.8 percent, last year.